The Federal Energy Regulatory Commission announced March 15 that it will change a policy regarding master limited partnerships' tax benefits. MLPs for interstate natural gas and oil pipelines will no longer be allowed to “recover an income tax allowance in cost-of-service rates,” according to a press release . The change was spurred by an appeals court decision in United Airlines Inc. v. FERC that said FERC failed to demonstrate that a pipeline operator was not receiving “double recovery” of “both an income tax allowance and a return on equity determined by the discounted cash flow methodology,” per the release.

In an unprecedented move, FERC (the Federal Energy Regulatory Commission) revised its income tax policy for MLPs. MLPs, which aren’t taxed at the corporate level and which operate as pass-through entities, allocate their income to investors. To compensate investors for the income tax burden, MLPs have been receiving an income tax allowance from customers on FERC-regulated pipelines.

Enterprise Products Partners L.P. announced that revisions announced today by the Federal Energy Regulatory Commission with regard to its 2005 policy for recovery of income taxes are not expected to have a material impact to the earnings and cash flow of Enterprise.

In its 2018 Analyst Conference presentation, Enterprise Products Partners (EPD) discussed the correlation of its stock price with distribution growth. According to the company, the correlation coefficient between EPD’s stock price and distribution growth was 0.93 from January 2010 to August 2014. It fell to just 0.32 in the TTM (trailing-12-month) period. The correlations of Enterprise Products’ stock price with its distribution growth over the 2010–2014 and TTM periods are shown in the graphs above.

Enterprise Products Partners (EPD) is constructing a natural gas processing complex with three trains at Orla, Texas. The inlet volume capacity for the complex is planned to be 900 MMcf/d (million cubic feet per day) with NGL (natural gas liquids) extraction capacity of 120,000 bpd (barrels per day). Once the Orla projects are complete, Enterprise Products should have a total natural gas processing capacity of more than 1.2 bcf/d (billion cubic feet per day) and the capability to extract more than 200,000 bpd of NGLs in the Permian Basin.

According to the EIA’s (Energy Information Administration’s) STEO (“Short-Term Energy Outlook”) report for January 2018, US crude oil production is expected to increase by an average 1.2 million b/d (barrels per day) from December 2017 to December 2019. According to Baker Hughes’ data gathered by Enterprise Products Partners (EPD), 55% of total rigs currently are in the Permian, Eagle Ford, and Haynesville regions. As the above graph shows, nearly 60% of all DUCs (drilled but uncompleted wells) are in the Permian, Eagle Ford, and Haynesville shales.

NGL Energy Partners (NGL) is trading at a yield of ~12.2%. The fall in NGL stock has pushed its yield higher. In the quarter that ended December 31, 2017, NGL Energy Partners completed the sale of its 50% interest in Glass Mountain Pipeline for $300 million.